RIV:CC - RIV Capital Closing in on New York Acquisition Loses $142 Million in Q2
RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) posted a $142.3 million loss for its second quarter of fiscal 2023, but most of the losses were chalked up to a “goodwill impairment charge” as part of the upcoming acquisition of New York-based Etain – a deal that RIV Capital leadership said would give the firm a national foundation for future growth.
RIV took a $138.9 million write-down on its Etain acquisition deal, based on updated cash flows and “to account for the enhanced risk and uncertainty attached to the New York market,” the company reported.
The losses are an extreme increase from the same period last year, when RIV Capital lost just $1.2 million for the quarter that closed at the end of September. Year-to-date, RIV’s net loss totaled $145.8 million, compared with just $29.1 million a year ago.
Still, the company remains bullish, particularly due to the pending launch of the New York recreational cannabis market, even though Etain and the other nine licensed medical cannabis companies in the state are forbidden from participating in recreational sales for at least another three years, under draft regulations released on Nov. 21.
On that same date, however, New York regulators gave their final sign off to the Etain acquisition by RIV, which executives said will position the firm to do well in the New York cannabis wholesale market.
“Having cleared all regulatory hurdles, we are eager to complete the final closing of the Etain acquisition before the end of 2022,” RIV Capital CEO Mark Sims said in a news release. “Our expanding cultivation footprint designed to support the premium New York market provides RIV Capital with attractive wholesale opportunities.”
During the most recent quarter, RIV reported it signed a lease agreement with Zephyr for two indoor cultivation and manufacturing facilities with 75,000 square feet apiece and plans to partner with social equity cannabis growers in at least 10,000 square feet of canopy of that space.
RIV Capital also still has $165 million in cash, which it said it intends to use to continue expanding and acquiring other cannabis companies across the country.